EU and Norway update their VAT cooperation agreement
Norway and the European Union have taken a significant step towards enhancing cooperation on value-added tax (VAT) with the signing of a renegotiated VAT agreement on 2 October 2024.
This updated agreement aims to strengthen administrative collaboration and improve efforts to combat VAT fraud across borders. One key provision of the agreement grants Norwegian tax authorities access to advanced EU tools designed to detect and prevent VAT fraud, marking an important development in the alignment of tax enforcement strategies between Norway and the EU. The agreement is subject to approval by the Norwegian Parliament (Storting) before it can take full effect.
See Norway VAT guide.
This collaboration highlights how Norway, as an EEA member, benefits from access to EU tools and mechanisms without full EU membership. It also demonstrates the shared commitment to maintaining fair and transparent tax systems, which are essential for fostering trust and economic stability. With the renegotiated agreement, both Norway and the EU are poised to address VAT fraud more effectively, ensuring that their respective systems remain resilient in an increasingly interconnected global economy.
Norway closely tracks EU VAT regime
VAT, a consumption tax levied on goods and services, plays a crucial role in the economies of both Norway and EU member states. Although Norway is not a member of the EU, it is closely linked through its membership in the European Economic Area (EEA). This connection facilitates cooperation on various policies, including VAT, to ensure smooth cross-border trade and the proper functioning of the internal market. The renegotiated VAT agreement underscores the importance of these collaborative efforts, particularly in tackling the increasingly sophisticated methods used by fraudsters to exploit VAT systems.
Norway’s VAT system shares several similarities with the EU’s framework. Both systems operate under a common principle of taxing consumption while allowing for input tax deductions. However, Norway’s VAT rates and rules are distinct and independently set by Norwegian authorities. Despite these differences, the two systems are interconnected, particularly in the context of cross-border transactions. The new agreement is expected to streamline information sharing and strengthen Norway’s capacity to address fraudulent activities involving EU businesses and individuals.
